Oracle (Nasdaq: ORCL ) is on an acquisition tear. Virtualization software makes liquid capsaicin seem as mild as marshmallows. So of course Oracle is buying a credible virtual machine expert.
Just weeks after agreeing to lay down $5.6 billion for Sun Microsystems (Nasdaq: JAVA ) -- net of Sun's considerable cash hoard -- the database titan has picked up privately held Virtual Iron for an undisclosed sum. Virtual Iron is certainly a much smaller purchase than Sun. It should quickly become accretive to Oracle's growth though; all we know of Virtual Iron's finances today is that it grew revenue 130% year over year at the end of 2008.
So now Oracle owns three different virtualization products: Sun's xVM suite, Virtual Iron's eponymous package, and its own Oracle VM. Curiously, all three solutions borrow the crucial hypervisor component, which helps you manage a multitude of virtual machines from a central point, from the previously open-source Xen project. Citrix Systems (Nasdaq: CTXS ) owns Xen now, giving that company a bit of leverage on what happens in the broader virtualization market.
Of course, with VMware (NYSE: VMW ) looming large over said market and Microsoft (Nasdaq: MSFT ) working hard to catch up with its Hyper-V line, that could make small-cap Citrix the next acquisition target here. Cisco Systems (Nasdaq: CSCO ) is not afraid of buying its way into new markets, doesn't have any virtual machine software of its own, and could essentially build an entire data center on its own platforms with Citrix under its belt. Oh, and a deal for less than $10 billion (including a generous buyout premium) would be a mere morsel for ultra-rich Cisco. Many of the same arguments would work for Hewlett-Packard (NYSE: HPQ ) as well.
For Oracle, this was a savvy deal that adds a well-respected software offering to an already burgeoning portfolio. Virtual Iron's low-cost one-stop-shopping product has appealed to small and medium businesses while Oracle traditionally grabs large enterprise accounts first. So Larry Ellison just grew his addressable market for virtualization -- and will probably follow up with package deals for databases and middleware. Nice move, Larry.
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